Friday, 6 February 2015

Ten Tips on How to Measure Change Management Success

I have an opportunity to present "How do we Measure Success in Change Management?" to a group of change management consultants, my peers.Selecting key performance indicators (KPIs) continues to be a hot topic for organizational initiatives, from learning & development to large scale transformations: how do you measure the benefits of this type of investment?

There are many ways to do this incorrectly, such as measuring things that:

ROI is the Holy Grail of performance measurement because it implies financial significance and accuracy. A good investment is one where the tangible benefits gained are greater than the costs incurred to secure them.

Measuring change in this way is challenging, if not impossible, because the numbers are typically based on subjective estimates. For example, I heard someone proclaim that sales training resulted in 25 percent of his company's annual sales increase. Based on what? Usually these estimates are guesses based on impressions, or wishful thinking, versus facts, which negates the significance and accuracy they are intended to establish.Here are some suggestions on how to measure change management success:

Set expectations that change management (or any organizational initiative) is a contributor to hard results, not the only contributor.

Pick a few strong KPIs versus a long list of them―it focuses the evaluation exercise and reduces resource requirements.

Focus on the metrics that leaders value―others may help you but they will be viewed by the organization as irrelevant.

Gain agreement on what data will be tracked by whom at the beginning of an initiative―the data and the resources to collect it may not exist.

Include tracking responsibilities in people's goals―it will increase the likelihood they will be tracked well and people will be rewarded for doing so.

Be clear on how long KPIs will be measured―most benefits are realized months or a year past implementation.

Hello Mrs Wallace. Change Management KPIs are a subset of the business KPIs that the Leadership Team members (or sponsor of the change) routinely follow. With the help of the project team, they decide which ones will accurately measure the initiative's impact on performance.

Change Management KPIs are defined at the beginning of the initiative and reviewed by the leadership team throughout (and after) the project.

The success or failure of an organization depends on how effective the management is. The management team of a company is responsible for propelling the future growth in the right direction. It also responsible for administering and controlling the business activities and accounting for the results. An ineffective management at the top results in failure of the company. Such is the importance of management.

Hi Luis, thank you for your question. There are two ways to approach quantifying benefits of a change management strategy: stating the benefits that similar companies have gained and quantifying the costs incurred by your organization from not having one. The latter approach is far more effective because leaders have context for the data (I was there) and the costs are easily validated. For example, "since we didn't have a change management strategy, the new customer management system was delayed by three months, which resulted in $100,000 supplier cost overrun. Also, two of our major customers used the disrupted customer support they experienced to negotiate better annual contracts, which cost $300,000 in revenue and $30,000 in profit. we could have lost the customers. If we had, the cost of a new customer acquisition is $25,000."

Another example is "since we didn't have a change management strategy, we lost two key directors when the merger was announced. Cost of rehiring these specialists was $50,000 and six months lost productivity -- their billable time for six months was $100,000 and we didn't have the capabilities to deliver this work. Also, their departure caused some customers to hold off on orders. Year-to-year sales dropped by $150,000. We only made up $75,000 later in the year (we lost $75,000 in sales). This scenario is a real one that happened to a business last year.